Tax-aware investing
How much tax a 1031 exchange defers, and what boot costs
A 1031 exchange calculator: investors enter sale price, selling costs, adjusted basis, cash taken out and a capital gains rate to see the deferred gain and the tax due now on boot.
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How does a 1031 exchange defer tax?
By reinvesting the proceeds of investment real estate into like-kind property, the gain is deferred rather than taxed now. Cash or other value taken out (boot) is taxable to the extent of the gain. Deadlines are strict: 45 calendar days to identify, 180 to close2026 · IRS, from the sale's closing.
When a property is under contract to sell
Investors selling a rental or commercial property face a large capital gains bill and hear about 1031 exchanges from their agent. Before committing to a replacement property and an intermediary, they want to know what's at stake.
What the client types into a search box
“how much tax will I save with a 1031 exchange”
How a client works through it
Enter sale price and costs
The contract price and selling costs.
Enter adjusted basis
Purchase price plus improvements minus depreciation.
Enter boot and rate
Cash taken out and the capital gains rate.
See the deferral
Total realized gain, deferred gain, recognized gain and tax due now.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Sale price, basis and boot show the gain and the client's intentions. A large gain with significant boot suggests the client wants some cash; the trade-off between cash and tax is a planning discussion.
Realized, recognized and deferred gain
Total Realized Gain is sale price minus costs and basis. Recognized (Taxable) Gain is the part taxed now because of boot, and Tax Due Now on Boot applies the rate. Deferred Gain carries into the replacement property, and Tax Deferred shows the tax postponed.
Deferral isn't forgiveness: the deferred gain reduces basis in the new property.
Results shown: Deferred Gain · Recognized (Taxable) Gain · Tax Deferred · Total Realized Gain · Tax Due Now on Boot.
Why do CPA firms want 1031 requests early?
Exchanges must be structured before closing: a qualified intermediary, correct paperwork, and decisions about boot and debt replacement. A CPA engaged early can prevent expensive errors and plan depreciation recapture.
For advisers, exchange decisions affect a client's overall allocation to real estate.
Follow-ups this request opens
- Engage a qualified intermediary before closing
- Plan debt replacement to avoid mortgage boot
- Estimate depreciation recapture and state tax
- Compare exchanging with selling and paying tax
What this calculator leaves out
- Simplified gain and boot model.
- Depreciation recapture rates are not applied separately.
- Mortgage boot and debt replacement not modeled.
- State taxes excluded.
Platform disclaimer shown under the calculator: Estimates only. A simplified model of gain recognition and boot; it ignores depreciation recapture rates, financing details and state rules. Consult a qualified intermediary and tax advisor.
Compliance note for firms
Exchange structuring involves legal and tax requirements; advice should be documented under Circular 230 §10.37 and coordinated with the qualified intermediary. Advisers should be careful not to steer clients into replacement investments without suitability analysis.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
2026 figures this page relies on
| Figure | Value | Tax year | Source |
|---|---|---|---|
| 1031 exchange identification and exchange periods | 45 calendar days to identify, 180 to close | 2026 | IRS |
The same values drive the calculator. Full list on the 2026 figures page.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- 1031 exchange
- A swap of investment or business real estate for other like-kind property under Section 1031 of the Internal Revenue Code. When the rules are followed, the gain on the property sold is postponed rather than taxed in the year of sale. This calculator estimates how much gain is deferred and how much becomes taxable now.
- Boot
- Cash or other non-like-kind value you receive in the exchange instead of reinvesting it, such as sale proceeds you keep. Boot is taxable up to the amount of your realized gain. In this calculator, the Cash Taken Out figure is treated as boot and drives both the recognized gain and the tax due now.
- Adjusted cost basis
- What the IRS treats as your investment in the property: the original purchase price plus capital improvements, minus the depreciation you have claimed. It is subtracted from the net sale price to find the gain. A lower basis, often the result of years of depreciation, means a larger gain to defer or pay tax on.
- Realized gain
- The total economic gain on the sale: sale price minus selling costs minus adjusted cost basis. It exists whether or not tax is due this year. In an exchange, the realized gain splits into a recognized part, taxed now, and a deferred part carried into the replacement property. This calculator reports it as Total Realized Gain.
- Recognized gain
- The portion of the realized gain that is taxable in the year of the exchange. Here it equals the boot received, but never more than the realized gain itself. Multiplying the recognized gain by your capital gains tax rate gives the estimated tax due now, shown in this calculator as Tax Due Now on Boot.
- Deferred gain
- The part of the realized gain that is not taxed now because it was rolled into the replacement property. The tax is postponed, not forgiven: the deferred gain lowers the basis of the new property and can become taxable when that property is later sold in a taxable sale. Tax Deferred applies your rate to this amount.
In our glossary: 1031 exchange · Boot
1031 Like-Kind Exchange calculator: questions from firms and clients
What property qualifies?
Real property held for investment or business use, exchanged for like-kind real property.
What is boot?
Cash or non-like-kind value received, which is taxable.
What are the deadlines?
45 calendar days to identify, 180 to close2026 · IRS.
Do I need a qualified intermediary?
Yes, to hold the proceeds; taking control of the cash can disqualify the exchange.
Is depreciation recapture deferred?
Generally yes, within a full exchange; boot can trigger it.
Can I exchange my home?
No, personal residences don't qualify, though other exclusions may apply.
What about debt?
Taking on less debt on the replacement can create boot.
Which plan includes it?
Network. See pricing.
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